The S&P 500 ended up 1.2% at an 11-week high, giving up in the final half-hour of trading almost 50% of gains that topped 2%. Stocks had soared earlier as investors poured back into risk assets on speculation the worst of the economic hit from the pandemic has passed. Megacap tech shares in the Nasdaq 100 fell on the day, while chipmakers exposed to China tumbled at the end of the session.

Traders spent much of the day pouring into riskier pockets of the market as they played catch-up to a rally that pushed socks higher by as much as 35% from March lows, even as news over the long weekend brought signs of mounting tension with China. That bid faded after the report that the Treasury Department could impose controls on transactions and freeze assets of Chinese officials and businesses for implementing a new national security law that would curtail the rights and freedoms of Hong Kong citizens.

Fresh economic data had showed that the easing of lockdown restrictions is boosting economic activity. The contours of the gains, with small-cap and energy shares leading, suggest that investors who doubted its staying power are now targeting areas that have lagged behind. Large-cap tech shares, the group that lifted stocks from pandemic lows, trailed Tuesday.

While economic data is still awful by virtually any historic comparison, a consensus among investors is building that the worst from the pandemic is over, easing fear that the rally was a bear trap destined to come undone. Now they will also contend with an increase in China-U.S. tension that could threaten trade at a delicate time for the global recovery.

Elsewhere, the Stoxx Europe 600 Index advanced, with travel stocks surging on reports that Germany plans to lift travel warnings for 31 European countries. The U.K. also announced steps toward getting back to business, sending the pound up by the most in almost a month.

Japan led the equity advance in Asia as the world’s third-largest economy reopened, and shares rose in Hong Kong, which showed signs of stabilizing after weekend unrest. Treasuries slid after the three-day U.S. weekend, alongside Germany’s government debt.

While investors’ spirits are being lifted by economic reopenings, there are also mounting signs that coronavirus infection rates are moderating. The Japanese government ended its nationwide state of emergency Monday, while Germany recorded a decline in the number of new virus cases. Signs that more euro-area stimulus is on the way are also helping support the appetite for risk.

“The narrative for markets is shifting somewhat, with hopes associated with the easing of lockdown measures in many countries and still very exaggerated hopes of a vaccine being found short-term, needing to be balanced against escalating U.S./China tensions,” said Marc Ostwald, chief economist and global strategist at ADM Investor Services.

The euro strengthened ahead of negotiations this week on the form of a bloc-wide recovery fund. WTI crude oil advanced to around $34 a barrel on hopes the market may rebalance after historic output cuts.

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Here are some key events coming up:

– Earnings continue with companies including British Land, Royal Bank of Canada and HP.

– Thursday brings the U.S. jobless claims reading for the week ended May 23.

– Federal Reserve Chairman Jerome Powell is scheduled to participate in a virtual discussion Friday.

– – –

These are the main moves in markets:

Stocks

– The S&P 500 Index added 1.2% at 4 p.m. New York time.

– The Russell 2000 rose 2.8%, and the Dow Jones Industrial Average jumped 2.1%

– The Stoxx Europe 600 Index climbed 1.1%.

– The MSCI Asia Pacific Index surged 2.3%.

– The MSCI Emerging Market Index surged 1.8%.

Currencies

– The Bloomberg Dollar Spot Index sank 1%.

– The euro rose 0.97%, to $1.0991.

– The British pound surged 1.2%, to $1.234.

– The Japanese yen rose 0.2%, to 107.54 per dollar.

Bonds

– The yield on 10-year Treasuries rose three basis points, to 0.69%.

– Germany’s 10-year yield climbed seven basis points, to -0.43%.

– Britain’s 10-year yield rose four basis point, to 0.21%.

– Japan’s 10-year yield rose one basis point, to 0.008%.

Commodities

– West Texas Intermediate crude rose 2.1%, to $33.93 a barrel.

– Gold futures fell 1.6%, to $1,725 an ounce.

Nigeria, whose millions of barrels of unsold crude were the epitome of the oil market’s glut in recent weeks, lifted the selling price for its supplies in June from record lows. Algeria also hiked its official prices by almost $3 a barrel. The moves by the two OPEC nations show increasing confidence that they can sell their barrels at costlier levels, providing them some respite after being hammered by the coronavirus outbreak.

Oil has surged more than 80% this month as demand has picked up and output cuts have started to chip away at a massive oversupply. That has also led to a steady flattening in the futures curve — a signal market supplies are growing tighter. Russia, a key member of the OPEC+ alliance that has pledged record output cuts, expects the market to balance in June or July.

“Global supply is still heading lower while demand is rising,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “This all lays the ground for higher prices down the road.”

Around the world, producers have slashed global production by 14 million to 15 million barrels a day so far, Russian Energy Minister Alexander Novak said on Monday. The nation sees the current global surplus at 7 million to 12 million barrels a day, RIA Novosti reported Monday.

Though output has been cut and demand is recovering, there are ongoing signs of the damage the virus has wrought on the industry. Both refineries in the Philippines have now been shut as a result of weak fuel demand, according to their operators.

Total transactions amounted to Bt73.954 billion with an index high of 1,345.31 and a low of 1,332.30.

An analyst at Krungsri Securities expects the index to rise to between 1,330 and 1,335 points thanks to progress in the development of a Covid-19 vaccine as well as hopes for a third round of measures being eased.

“Novavax, a clinical-stage biotechnology company, has launched the first phase of vaccine trials and expects to have results by July,” the analyst said.

He added that economic activities and investment will also gain positive sentiment from the Centre for Covid-19 Situation Administration’s third phase of easing lockdown measures by the end of this week.

“However, the index will be under pressure from uncertainty related to the US-China trade war, especially after Washington said it may impose sanctions on Beijing if it enforces a national security law in Hong Kong,” the analyst said.

The top 10 stocks with the highest trade values today were MINT, CPALL, STA, BAM, KCE, PTT, AOT, CPN, BBL and SUPER.

As of 4.30pm, crude oil price rose by US$0.83 or 2.50 per cent to $34.08 per barrel, while gold dropped by $10.80 or 0.62 per cent to $1,724.70 per ounce.

The global indices were on the rise:

Japan’s Nikkei Index closed at 21,271.17, up 529.52 points, or 2.55 per cent.

China’s Shanghai SE Composite Index closed at 2,846.55, up 28.58 points, or 1.01 per cent, while Shenzhen SE Component Index closed at 10,815.43, up 222.59 points, or 2.10 per cent.

Hong Kong’s Hang Seng Index closed at 23,384.66, up 432.42 points, or 1.88 per cent.

South Korea’s KOSPI Index closed at 2,029.78, up 35.18 points, or 1.76 per cent.

Taiwan’s TAIEX Index closed at 10,997.21, up 126.03 points, or 1.16 per cent.

As of 11.15am today, the Erawan Group (ERW) stock price was up 11.88 per cent or Bt0.38 to Bt3.58, Minor International (MINT) was up 11.49 per cent or Bt2 to Bt19.40, and Central Plaza Hotel (CENTEL) increased by 11.06 per cent or Bt2.40 to Bt24.10.

Therdsak Thaveeteeratham, executive vice president at Asia Plus Securities, said that hotel stocks were lifted by a government move to hand out coupons for discounts of up to 50 per cent on hotel rooms to boost tourism amid hopes that the third phase of lockdown easing is about to begin.

The government announced last week that the next phase of restrictions were set to be lifted on June 1.

“These positive sentiments will boost economic activities and encourage tourists to travel,” he said.

He expects these factors to boost hotel stocks in the short term, as hotels are expected to suffer losses over the whole year due to travel bans and other virus-related restrictions.

“We expect foreign investors to return to Thailand in the fourth quarter of this year,” he said. “Therefore, we advise investing in hotel stocks for short-term speculation.”

As of 9.28am, the buying price of a gold bar was Bt26,000 per baht weight and selling price Bt26,200, while gold ornaments were priced at Bt25,529.44 and Bt26,700, respectively.

The Gold Spot Index price this morning moved to around US$1,732 (Bt55,318) per ounce. The US gold market yesterday was closed for Memorial Day.

Meanwhile, the gold price on the Hong Kong market rose by HK$25 to $16,005 (Bt65,936) per tael.

A stock analyst at Krungsri Securities expected the index to rise to between 1,330 and 1,335 points due to the progress seen in developing a Covid-19 vaccine and hopes for the third phase of lockdown easing.

“Novavax, a clinical-stage biotechnology company, has conducted the first phase of its Covid-19 vaccine trial, expecting to get results by July,” the analyst pointed out.

He said that economic activities and investment would also gain positive sentiment from the Centre for Covid-19 Situation Administration’s third phase of lockdown easing by the end of this week.

“However, the index would be under pressure from uncertainty following a renewed trade war after the US said it might sanction China if Beijing imposes a national security law in Hong Kong,” the analyst said.

He recommended investors buy:

● Stocks whose second quarter performance will improve, such as CKP, Tasco, STA, RS and EPG.

● Stocks which will benefit from the third phase of lockdown easing, such as Major and SPA.

● Stocks which have been added to the MSCI calculation – AWC, BAM and KTC.